Some landlords have been speaking
to me recently about stories in the press and their concerns about booming
house prices and the next housing bubble.
Whether you are an established landlord or one considering entering the
market for the first time, it is so important you do your homework. Buying a
property in Plymouth and the surrounding area is an investment, and as such,
one needs to do one's homework. I am
often asked to give my opinion to existing landlords of mine, and even
landlords with other agencies. I do not charge for this, as it is only my
opinion, and you cannot charge for opinions, can you! Anyway, in a nutshell, Plymouth
landlords can either go for low risk, low yield but decent capital growth,
whilst others invest for high monthly yields, high risk but with a tendency of
lower capital growth.
If you are going to be buying
soon in Plymouth, it is vital to look to ensure you build in some capital
growth by getting a property at a discount or by finding a way to add value.
Securing capital growth is going to be tough over the coming years, but don’t
lose out if it’s not bargain of the year. Prices would need to rise by 25% to
get back to 2007 levels. That figure might surprise allot of people, but let me
explain.
Yes, in Plymouth we are only, on
average, 5% below the actual values that were being achieved in boom of
Autumn 2007, however, this doesn't take into account inflation. Since 2007,
inflation has risen over those six and half years by around 19%. So in reality,
prices would need to be 24% higher today to be at the same 'real' level
than they were in 2007. (24% made up of 19% inflation plus the 5% growth
required to return to 2007 figures)
Some forecasters estimate that properties
bought in 2007 at the height of the market, will take until 2020 or even 2025
to recover (when you include the impact of inflation). Many landlords will need
to take a serious look at any existing property or new ones to make sure they
can achieve capital growth, if that's what they desire, and that this increases
in line with inflation. My answer to landlords, get the best advice and opinion
you can. Speak to me, speak to others, do your homework and drive a hard
bargain when buying, thus ensuring when prices do start to rise again, you are
in pole position.
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